Gold soared to a new six-year high and gold futures target a fifth weekly gain today as expectations of a Federal Reserve interest-rate cut this month solidified and Mideast tensions ramped up.
Gold also got a boost after remarks published this week by billionaire Ray Dalio, founder of the world’s largest hedge fund, who recommended adding the yellow metal to portfolios. He said that central bank policies are about to cause a “paradigm shift” in the markets.
August gold was up early Friday on Comex after advancing 0.3% Thursday and gaining 1.1% so far this week. Currently, the August contract is at $1,436.90, up $8.80 as gold targets fifth weekly gain.
The CME FedWatch Tool has kept the odds of a July 31 rate cut at 100% since the Federal Open Market Committee’s last meeting in June, but sentiment about the depth of the cut has fluctuated. The tool put the odds of a 50-basis-point cut at 41.1% early Friday, compared with 19.9% the week before. The likelihood of a 25-basis-point reduction has fallen to 58.9% from 80.1%.
New York Fed President John Williams said Thursday that central bankers need to “act quickly” as economic growth slows, remarks investors saw as indicating that a rate cut was a near certainty. But the Fed tried to dial down the response later in the day. A spokesman said Williams was drawing from research, not hinting at what may happen at Fed policymakers’ meeting later this month. However, this morning, President Trump has weighed, or tweeted, in on the topic, reiterated his call for lower interest rates and slammed the Fed for what he called its “faulty thought process.”
Meanwhile in “safe haven” news, President Donald Trump announced Thursday that a U.S. warship destroyed an Iranian drone in the Strait of Hormuz, heightening tensions between the two countries and adding to gold’s luster as a hedge against uncertainty.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.42% to 814.62 metric tons Thursday from 803.18 tons Wednesday, Reuters reported.
Despite all these bullish elements, gold’s gains have been dwarfed this week by those seen in silver futures, which climbed 6.3% in the first four days of the week and settled at a one-year high of $16.198 an ounce Thursday on Comex.
Fresnillo, the world’s largest silver miner, cut its 2019 forecast for both silver and gold production this week. The Mexican miner expects to produce 55-58 million ounces of silver this year, down from the 58-61 million previously forecast, according to Dow Jones.
September silver futures also showed an advance early Friday. They jumped 1.4% Thursday. Currently the contract is at $16.475, up $0.277.
Spot platinum is higher this morning after rallying 2.3% in the first four days of the week, currently at $860.20, up $11.70. Spot palladium is down a tad for the week, currently at $1532.90.
If you’re looking to buy gold bars or bullion, contact your local Boston coin shop, Boston Bullion at (781) 710-8419.